On the Web 2.0 bubble


To London, where the web utopianism has a name (“Web 2.0”) and is a rage amongst marketing and media people. I reiterated a point I had raised two years earlier:

&ldquo”Let’s acknowledge what the Web has been successful at: as a presentation layer. But the Web 2.0 kids desperately want to write system apps on their “global operating system” – only they don’t have the cojones to do system level thinking. Real engineers look at where systems (and humans) fail – their priority isn’t a cool demo. They’re pessimistic. And there’s no place for pessimism at a Web 2.0 conference.”

Have a listen to the MP3, or click below the fold to read the transcript:

Tim O’Reilly had snootily replied that he was unable to respond to “innuendo”-

“… this is yellow journalismi: find the outliers, and attack them to make a point.”

For O’Reilly, infrastructure is an “outlier”.

London, 3 February 2006

Good evening, how nice it is to address an English audience. At every
panel I’ve addressed for the past six years – I’ve been living in San
Francisco – I’ve seen the tops of everyone heads, their noses are in
the laptop, and no one’s paying any attention at all!

I was looking for a snappy quote to introduce this subject, “The Next
Bubble?” The best one was supplied about 9 months ago by a friend of
mine who did very well out of the first internet boom, and has about
100 million dollars to spend, and he’s only spending about 1 million of
it in new web start-ups. So I asked him “Why are you sitting this one
out?” He replied, “the big ROIs are going to come from solving the
really big problems that haven’t fixed yet, and Web 2.0 doesn’t solve
any of them”.

OK, tonight I’ll ask if this is bubble, what’s going to make it burst
if it is a bubble, and then conclude with some very optimistic
technology scenarios that once we stop focusing completely on the web
and think more broadly about technology, there’s actually quite an
interesting picture out there for all of you.

Firstly, then, “Is this a bubble?”

I’d agree with Mike and Dave, earlier, in this isn’t a bubble on the
scale of five or six years ago. That was the biggest loss of wealth in
human history.

This time around I believe the figure is something like $500m that’s
been invested in web companies. And people aren’t losing their houses
or their investments; there isn’t the IPO market, so I think those
earlier points were really well made. So there isn’t an economic bubble
of any particular significance.

But there is a rhetorical bubble.

I think we’re at the crest of a wave of utopian rhetoric which we
haven’t seen since the Artifical Intelligence hype 30 years ago, when
people confidently predicted chess playing computers would beat humans
in a couple of years, and five years down from that we’d be enslaved to
robots, who would nevertheless tuck us in at bed time..

This is the real problem with the Web. I’ve been trying to figure it
out with our readers – why this is? Let me give you an example of how
there’s a very different view of the world when you’re inside this One-
Web kind-of-thinking than to when you’re outside it.

About 18 months ago I did a little satirical, throwaway piece about Tim
O’Reilly’s definition of Web 2.0 because the poor bloke had just made
his 45th attempt to try and define it. He’d come up with this very
blobby chart full of nebulous concepts, so I suggested five definitions
of my own. And invited readers to supply their own.

When I looked at my computer three hours laterm I saw 600 incoming
emails in response. Within 24 hours later there were about a thousand.
Just one of them defended the idea.

“Boy,” I thought, “do people really not like Web 2.0.”

A lot of these came from infrastructure people. You could see this
great wave of opprobrium going round the world. It started with people
who runs systems for companies in the city, who were getting in at 6am.

They don’t like it for I think two reasons. One is that – and web
designers please don’t take this the wrong way, because it’s a real
skill – Web 2.0 is presentation layer people trying to solve
infrastructure level problems.

The internet has real big problems with spam and security, but a
utopian approach to building computer systems doesn’t solve them. Tim
O’Reilly had this phrase on his Web 2.0 chart: “Radical Trust”That
really got them annoyed! Anyone who has to maintain a firewall or a
corporate data system isn’t going to depend on “Radical Trust”. People
really hated that one.

The other reason is that they see this very woolly Californian New Age
rhetoric – which actually has its roots in some of the cults that
started on the West Coast – as the wooly cover for the next wave of
Management Consultants.

Now why does this utopian rhetoric appeal to people so much?

I think because it is a genuinely seductive world. Things are really
broken now – the media is owned by the same people who own the
government; it’s very hard to get a political consensus even on
something like global warming; but Web 2.0 is seductive because it
offers a kind off-the-shelf belief system. You can walk into a store
and get an suit to measure, well look at the Web offers you.

You have an alternative media – the Blogosphere – you never have to
leave that. You have an alternative epistemology – Wikipedia – where
nothing has to be true. And you have an alternative economics – The
Long Tail, that never has to add up. None of this has to add up!

So it’s very seductive, and I can see how it appeals to be people, who
start to project their fantasies onto it.

Let’s easier to be realistic about the internet, we can see what makes
money now and some of the fog’s cleared. But only once we’ve got past
the utopian rhetoric will we be able to see the much more realistic
opportunities for growth in the future.

Why do I think if this is a bubble why will it burst?

Fundamentally it’s the same as last time, There’s a rhetorical bubble
because people expect too much from technology. It can’t solve problems
that don’t exist. A lot of the uses that people are expecting to
generate downstream benefits from the internet aren’t going to work
even if you have a laptop strapped to your head the whole time.

Now for the positives I promised. Where do I see the growth coming

I see two waves once we’ve got some of the crazy rhetoric about the web
behind us, and the web is distracting us from both of these.

One is going to come from what’s called near field electronics and
RFIDs in particular – I’m not altogether sure this is going to be a
good thing, though. Now, most of you have experienced the self-checkout
at Tesco, where you spend far longer trying to wave things over a
scanner than you otherwise would.

Well, the good news is you’re going to have to do that fairly soon,
you’ll just walk out with your basket. And you card will be
automatically debited.

The downside, as I’m sure you can begin imagine, is that there’s no
human contact at all. Tesco’s will simply be a warehouse and you walk
in and walkout with your basket. A pretty soulless experience.

The other big change I’d like you to think about, which will really
transform things hopefully in a more positive way, is there’s a lot
going on developing new compensation mechanisms for digital media. I
was at the big annual music festival Midem a couple of weeks ago and
there’s such a lot going on behind the scenes to find ways of
compensating artists for what currently is called “piracy”, file

We’ve barely begun to think about the consequences for this. I’m
confident it will be the biggest positive boom in our lifetimes.

You’ll be able to walk in hear and your iPod will fill itself with
music from the jukebox. Your iPod will be a personal broadcast station
– for people on the bus.

The only reason we don’t have this in place is because the compensation
mechanism isn’t in place, the blanket or flat fee or all-you-can-eat

As a consequence a lot of the technology utopians have this great big
beef about copyright, “it must go!”, or “artists will have to work for
free – because we deserve it, we’re geeks”.

Obviously this is unsustainable in the long run and it will end fairly

I predict this within five years – although France very nearly voted
for it last year from a top-down point of view – it more or less said,
“here’s a 50p fee on your ISP bill, you can swap as much music as you
want, go and do it”. But it’ll be here in five years.

It’s one of the very few technologies I write about that’s truly social
– it gets us out talking to each other. Most technologies put up
barriers, and we use them to avoid each other.

Any questions on either of these, shout them out in Q&A. Thank you!

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